The yen was 0.2 percent from a two- week low against the euro as Asian stocks extended a global equity rally, curbing demand for haven assets. Japan’s currency fell yesterday after six central banks led by the Federal Reserve acted to lower the cost of borrowing dollars for banks. The greenback maintained its biggest slide in three weeks versus the euro before reports forecast to show U.S. manufacturing expanded and employers added more jobs last month. Australia’s currency slid after building approvals dropped and consumer spending slowed. The New Zealand dollar weakened as a Chinese index indicated a contraction in manufacturing. “Safe-haven currencies should perform badly while this optimism persists,” said Imre Speizer, a strategist in Auckland at Westpac Banking Corp., Australia’s second-largest lender. “We have more opportunity for policy makers to announce positive measures.”
The yen was at 104.51 per euro as of 12:38 p.m. in Tokyo from 104.37 in New York yesterday, when it declined to as low as 104.73, the least since Nov. 15. It was at 77.69 per dollar from 77.62. The U.S. currency was at $1.3453 per euro from $1.3446 yesterday, when it dropped 1 percent. That was the biggest one- day slide since Nov. 11.
IntercontinentalExchange Inc.’s Dollar Index (DXY), which it uses to track the greenback against the currencies of six major U.S. trading partners, held a three-day drop and traded at 78.350. The MSCI Asia Pacific Index (MXAP) gained 3.3 percent. The Standard & Poor’s 500 Index rallied 4.3 percent yesterday, the biggest advance (SPX) since Aug. 11.
Lower Premium
The premium banks pay to borrow dollars overnight from central banks will fall by half a percentage point to 50 basis points, the Fed said yesterday in a statement in Washington. The so-called dollar swap lines will be extended by six months to Feb. 1, 2013. The Fed coordinated the move with the European Central Bank and the central banks of Canada, Switzerland, Japan and the U.K. “This was in response to increased tension in global financial markets,” Bank of Japan Governor Masaaki Shirakawa said at a press conference in Tokyo yesterday. “Coordinated action will give markets a sense of security.”
The six central banks also agreed to create temporary bilateral swap programs so funding can be provided in any of the currencies “should market conditions so warrant.” Those swap lines were also authorized through Feb. 1, 2013. The ECB holds its next policy meeting on Dec. 8. European heads of government will meet the following day in Brussels. The dollar has depreciated 2 percent in the past week, the second-worst performer after the yen among the 10 developed- nation currencies tracked by Bloomberg Correlation-Weighted Indexes.
U.S. Economy
“If you have good economic data, it will be bad for the U.S. dollar,” Westpac’s Speizer said. “That’s because the U.S. dollar is a safe haven. When global sentiment improves, people leave the safe haven and go into risk.”
The Institute for Supply Management’s factory index, a gauge of manufacturing in the U.S., climbed to 51.8 in November from 50.8 the previous month, according to the median estimate of economists surveyed by Bloomberg News before today’s report. Payrolls climbed by 125,000 workers last month after rising 80,000 in October, a separate survey showed before figures from the Labor Department tomorrow. The jobless rate probably held at 9 percent. Gains in the euro were limited before Spain and France sell securities amid concern Europe’s debt crisis will boost borrowing costs for nations in the region.
‘Problem Still Exists’
“Europe’s debt problem still exists, and the euro is vulnerable to selling when it rebounds,” said Takuya Kawabata, a researcher in Tokyo at Gaitame.com Research Institute Ltd., a unit of Japan’s largest foreign-exchange margin company. “Bond yields may rise at auctions today in Spain and France.”
Spain is scheduled to sell as much as 3.75 billion euros ($5 billion) of debt today maturing in 2015, 2016 and 2017. France will offer bonds maturing in 2017, 2021, 2026 and 2041 and may auction up to 4.5 billion euros of securities.
Australia’s dollar dropped against all of its 16 major counterparts after the country’s statistics bureau said the number of permits granted to build or renovate houses and apartments fell 10.7 percent in October from the previous month, when they dropped a revised 14.2 percent. Retail sales climbed 0.2 percent from a month earlier, when they rose 0.4 percent. New Zealand’s currency held earlier declines after a Chinese index signaled a contraction in manufacturing for the first time since February 2009.
China’s Purchasing Managers’ Index fell to 49.0 in November from 50.4 in October, the China Federation of Logistics and Purchasing said in a statement today. The median estimate in a Bloomberg survey of 18 economists was 49.8. A level above 50 indicates expansion. China is Australia’s largest trading partner and New Zealand’s second-biggest export destination. The Australian dollar fell 0.7 percent to $1.0211, while New Zealand’s currency lost 0.3 percent to 77.80 U.S. cents.